Saturday, April 19, 2014

The Rise of Economism in the US: The Business Side

I recently posted about Daniel Stedman Jones’s book, Masters of the Universe, a history of
the rise of economism (which he terms neoliberalism) in the US and the UK since
the 1940s. Stedman Jones has a bit of a burr under his saddle about Marxism,
and he appears to interpret any historical account that stresses how the
wealthy supported economism-type policies out of their own self-interest as a
Marxist account. So he stresses the growth of economism as a set of ideas,
promulgated by think tanks. He has to admit that these think tanks relied upon
the financial support of sympathetic capitalists, but as far as he is
concerned, that’s more of a footnote.

In connection with other research, I had my attention
directed to the book by historian Kim Phillips-Fein, Invisible Hands: The Businessmen’s Crusade Against the New Deal (New
York: Norton, 2009). It seems to me that this volume makes a nice bookend with
Stedman Jones. Phillips-Fein is most interested in why the US business
community (she does not address the UK) found it in its interests to support
conservative counterattacks against the New Deal from the 1930s up to the
eventual triumph of conservatism (and economism) with the election of Reagan in
1980. Where Stedman Jones focuses on the ideas and the think tanks,
Phillips-Fein focuses on the organizing and proselytizing among the businessmen
to raise the money to support these ideological and political movements. I
would suggest that between them they provide a more thorough history of the US
part of this story than either volume would by itself. (Phillips-Fein talks
about Hayek, von Mises, Friedman, and the Mont Pelerin Society, but does not
mention the terms ‘neoliberalism’ or ‘economism’—just another clue as to how
the terminology issue continues to vex.)

In reading Phillips-Fein’s narrative, two themes especially
struck me. First, if one looks at the later years of the conservative movement,
one can find among the grievances of the business leaders specific instances of
overreaching among labor unions and government regulators, for which the
businessmen might be forgiven for thinking that the free enterprise system was
under serious attack. However, in the very early years, before either unions or
government had amassed that much power, we still see a core of conservative
capitalists viewing the New Deal as an unmitigated disaster. As Phillips-Fein
analyzes their thinking and quotes from some of their letters and speeches,
what emerges appears to be a very basic sense of entitlement to rule. These
white male business leaders seemed to think that they were, in fact, those
chosen to run America, and they expected to be deferred to. The very idea that
anyone else should demand an equal right to be heard, much less to guide public
policy, was treated by them as a fundamental affront to their status. While
various other segments of the population came along and joined the conservative
bandwagon as it picked up steam in the 1960s and 1970s, these capitalists were at
the center of it from the start.

Second, Phillips-Fein obviously exercised a lot of control
over the quotes that she selected, but a rather surprising number of the quotes
from these conservative capitalists, again reaching well back into the 1930s,
are frankly racist. In keeping with the idea that they are the natural leaders
and deserve deference on all sides was the further idea that minority groups
had better stay in their place. As the conservative movement started to make
headway, and as more politically-minded business leaders realized the need to
form strategic alliances, the main groups this core of business leaders reached
out to along the way were those that in various ways were opposed to
integration and civil rights. Here Phillips-Fein’s poster child is the late
Sen. Jesse Helms of North Carolina. To a person like me, raised in the North as
a self-ascribed liberal, Helms was nothing but a racist demagogue, pure and
simple. Phillips-Fein shows that in fact Helms was much more clever and original
than that. He was actually a master at reframing Southern segregation into the
language of freedom and free enterprise. For example, he agreed that to the
extent that a lunch counter was a public service, blacks had just as much right
as whites to sit down and be served. The only problem, he was quick to point
out, was that a lunch counter was not properly viewed as a public service at
all; a person owned the lunch counter and it was his private property. To
demand that he serve black customers in the South was to demand that the
Federal government could come in and dictate to private property owners what
they could do with their property. Helms was shrewd about avoiding attacks
against blacks and always changing the subject to freedom and opposition to Federal
government power over local communities and private individuals.

In short, the political success of the conservative movement
that ultimately enshrined economism as the common-sense political discourse of
the US would never have succeeded had the movement not been willing to ally
itself at every step with racism and segregation, while at the same time
denying that it was racist and segregationist.

In one other passage, Phillips-Fein contributes to our list
of logical inconsistencies within economism by going back to the core ideas of
Friedrich Hayek and Ludwig von Mises. She notes the irony of their views of the
free market and their need to protect it from any outside interference and
efforts at regulation. On the one hand they were in awe of the power of the
marketplace, “the spontaneity of the economy, a complex system that came into
existence without forethought or planning.” Yet at the same time they
saw the market as “a terribly fragile entity” which could be destroyed by even a
little bit of government interference or regulation. As she notes, they never
confronted or admitted, let alone explained, just how the marketplace could be
so robust and all-powerful on the one hand and so delicate and vulnerable on
the other.

LINKS

Why This Blog?

In 2011 I wrote THE GOLDEN CALF: ECONOMISM AND AMERICAN POLICY to explain and expose the belief system called economism, the uncritical worship of the so-called free market. I was particularly concerned to show how economism was far from being the hard-headed set of economic laws its proponents claimed, but rather a form of warmed-over religion. I was then prompted to begin this blog as the 2012 campaign progressed and I saw the Republican Party taking its positions straight out of the economism playbook--and, as always has to happen when trying to sell economism as practical policy, being dishonest about its claims.

The views expressed in this blog are my own and are not in any way endorsed or sponsored by my employer, The University of Texas Medical Branch at Galveston. Solely for identification purposes and not to suggest any official connection with the ideas expressed in this blog, I refer you to my workplace bio, http://imh.utmb.edu/about-us/faculty/howard-brody.